Message from the Director

Challenges for the Irish economy

Frances Ruane, Director, ESRI

Over a period of two years the Irish economy has moved from high rates of growth into a major recession. It is suffering a more severe downturn than other OECD countries, primarily because of the strong contraction in the construction sector.  

To return to growth, we need to regain fiscal stability and competitiveness, and to stabilize our financial sector. To ensure social harmony during this process of major structural adjustment, we must also be careful to implement policies that are seen to be fair as well as effective. Furthermore, we need to build long-term environmental sustainability into the new policies we craft.

Current ESRI Research

There is a strong focus in current ESRI research on the recession. The most recent review and short-term forecast for the economy is published in the Quarterly Economic Commentary. This suggests that the recession is likely to continue into mid 2010.     

Research on the medium term situation has already reviewed the macroeconomic context for a sustainable recovery, based on exploring the macroeconomic behaviour of the Irish economy. A research paper on the possible routes to economic recovery for the economy was published  in June. In the context of a synchronized global recovery, the turn-around for Ireland will depend crucially on its relationship with its main trading partners through the International Transmission of Business Cycles.  

ESRI labour market and migration researchers recently presented work at a policy conference on the labour market in recession. Researchers have also inputted into the Commission on Taxation, drawing on existing programmes of research on energy, the environment, and the macro economy. The Institute has provided the Commission with analysis of the distribution effects of different proposals using its tax-benefit (SWITCH) model. Training on the use of this model has also been provided to staff members in the Departments of Finance and Social & Family Affairs, to assist them in exploring distributional issues ahead of changes for Budget 2009. The Switch model was also used to explore tax questions in the annual ESRI/FFS pre-Budget Conference in October 2009.

ESRI research on health is feeding into the Expert Group on Resource Allocation and Financing in the Health Sector, established in April by the Minister for Health and Children. On October 21 the findings of a major research project on health demographics were presented at a conference  opened by the Minister for Health and Children. Research on education is providing evidence to increase the effectiveness, efficiency and equity of different elements of government spending on education. A conference on the findings from the first wave of the Growing up in Ireland survey of the 9-year old cohort will be held at Dublin Castle on 7th December.  

The need for the ESRI’s research has never been greater. In focusing on policy-relevant research issues, the ESRI is continuing a tradition that now stretches back almost 50 years. I am confident that the research activities and commentary by our research teams will continue to help government, business organisations and households to understand better the implications of this sudden change in our fortunes and the difficult decisions we must take to get on the road to economic recovery.  

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